Govt Says it Can Act on Offshore Gaming Platforms, Amid GST Debate

The GST Council's decision to levy 28 per cent GST on the turnover of online gaming led to mixed reactions, with many speculating that the impact of the 28% GST would lead gamers to shift to offshore platforms. The Minister of State for Finance, Pankaj Chaudhary, recently shared that sufficient enforcement provisions exist to take action against offshore gaming platforms which do not pay prescribed GST. “Some representations have been received from stakeholders stating so. Sufficient enforcement provisions exist to take action against offshore platforms which do not pay prescribed GST,” Chaudhary said in a written response.

On July 21, in a letter to the Prime Minister, a group of global and domestic investors backing online gaming platforms, such as Peak XV Partners (formerly Sequoia Capital India), Tiger Global Management, DST Global, ChrysCapital, Kalaari Capital and Alpha Wave Global had said the proposed GST levy could 'prompt many companies to move offshore to avoid an onerous tax burden which would send a wrong signal to the larger investor community and on the ease of doing business in India.'

Also Read: Tiger Global And 29 Other Investors Write To PM To Reconsider 28% GST On Online Gaming

Govt. Council To Meet Today To Decide On Definition Of Online Gaming

CNBC Tv18 reports that the GST Council's decision to levy a 28 per cent tax on the full face value of bets on online gaming companies is based on the recommendation of a Group of Ministers (GoM) on the issue. The council is reportedly scheduled to meet virtually today to decide on how to categorise online gaming.

On July 25, a consortium of more than 45 Indian video game companies has written to PMO, MeitY, and the I&B Ministry requesting the government to categorise video games separately and suggested that RMG/Fantasy should be referred to as ‘iGaming,’ the way it is defined in the rest of the world.

On July 14, in an open letter to the government, a group of 130 online gaming companies and industry associations including Mobile Premier League (MPL), Nazara Technologies, Gameskraft Technologies and Winzo Games, pointed out that a change in tax regime will benefit 'black market operators including illegal offshore gambling websites and nefarious unscrupulous elements.' “This will result in a substantial tax loss to the government and will expose Indian gamers to harmful offshore gambling websites, which are not accountable to the Government of India,” the letter read. The government, however, has dismissed the need for any consultations with the industry on the matter, saying that the decision at the GST Council to impose a 28% tax was 'unanimous.'